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Pediatric Coding Alert

Use This Chart to Select the Right Observation Code Every Time

Extended single-day observation admit, discharge should pay the same as 2-day services 

If a payer follows Medicare guidelines, you must report observation care based on the claim's dates and the patient's length of stay.

Financially, Medicare's short observation stay coding rule may make sense. Medicare "views a same-day observation discharge more than eight hours after the admission as equivalent in work" to an admission and discharge on different dates, says Brett Baker, a third-party payment specialist with the American College of Physicians.

Payment: You'll collect about the same Medicare reimbursement for an extended same-day observation admission and discharge as one that occurs on subsequent days. Codes 99234-99236 contain 3.58-5.89 relative value units and reimburse at an unadjusted Medicare rate of $135.67-$223.22, according to the 2005 National Physician Fee Schedule Relative Value File. Medicare pays about the same total amount ($138.33-$228.52) for a two-day observation stay using 99218-99220 (1.78-4.16 RVUs) and CPT 99217 (1.87 RVUs).

You should challenge any insurer that adopts Medicare's observation care coding guidelines but doesn't reimburse 99234-99236 payment about the same as 99218-99220 and 99217. "If a payer follows the fee schedule policies, the company should pay you based on that scale," says Maggie Mac, CMM, CPC, CMSCS, consulting manager at Pershing, Yoakley & Associates in Florida.

When you bill an insurer that follows Medicare's "Eight-Hour Rule," you should assign observation care codes (99217, 99218-99220, 99234-99236) based on the following time and date criteria:

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